So the long running gravy train of scammers out to earn a quick buck from PPI has finally run its course for a whopping total of £53B. There are a few people who were told they must have PPI (Payment Protection Insurance) even though they didn’t want it. These people are not being pitted, but they represent a tiny minority of the chislers in the PPI fiasco.
Virtually everybody else deserves scorn and antipathy. The money ultimately has been stolen from ordinary bank customers who did not take out PPI and were sensible enough to realise they didn’t want it, in the form of worse rates and services. I pit people who wanted PPI but when they could claim it was “missold” jumped at the chance for compo, people too stupid to realise they didn’t need PPI, the fucking PPI vulture lawyers on advert after advert telling people to claim, and the Financial Services authorities that allowed so many to claim with no evidence they were missold, 8 fucking percent interest on the period up to the claim, and so fucking long to claim.
Very few people had a genuine case that they really were missold and those few did indeed deserve compensation, everybody else are a bunch of loathsome greedy chancers.
Lots of people were mis-sold lots of insurance products over many years. I’m sorry that compensating for this has somehow impacted you. £53 billion sounds like a lot, but in the grand scheme of the UK finance sector over the timescale of the compo payments it’s just a minor balance sheet adjustment. And, y’know, people got their money back (minus commission if someone else did the paperwork, of course)
Here’s a revealing thing you posted:
Well, that’s kind of the point isn’t it? Don’t sell to people who aren’t fully informed.
Any difference from PMI (Private Mortgage Insurance) here in the US? Here companies required us to have the expensive PMI if we did not have 20% equity in our houses and made it a royal hassle if we took it out initially and then after a few years paid off enough of our mortgage to get our equity above 20% and then tried to cancel.
£1000 for every man woman and child in the UK can in no way be considered just a balance adjustment and it’s ultimately those who just said “no” that bear the brunt of it.
The problem with PPI was that it wasn’t sold fairly. Banks encouraged agents to sell it by offering them massive sales commissions, and they hid this from consumers. This created an unequal relationship between consumers and banks, which is a violation of the consumer rights act.
This unequal relationship took two forms:
1). Consumers thought they were paying for insurance when, a lot of the time, more than 50% of their payment was going straight into the salesman’s pocket in the form of commission. It’s reasonable to assume that if people were told that upfront, they wouldn’t have bought the PPI.
2). These massive commissions encouraged unethical selling techniques, such as salesmen flat-out lying to customers, saying the PPI was mandatory else they wouldn’t get the loan/mortgage/credit card/whatever.
Bottom line: Nearly everything about PPI was shady. It was just one in a long, long list of scams perpetrated by banks and insurance companies on the general public. If banks had been honest about what they were doing it never would’ve gone down this way.
No, I think that this was more like the payment protection option that some credit cards offer, that promises to pay the minimum payment on your credit card if you are disabled or unemployed. It always looked like a scam to me, but I’m jaded.
I only know what I read in the Financial Times, but am impressed that British regulators get so upset over the sort of mis-selling that is, to my view, a feature of US banking and insurance. I hate to imagine how would they would react to real crimes, like what Wells Fargo keeps getting accused of.
ahh the “if you pay 9.99 a month and lose your job or get injured you’ll be covered for x amount of months” of course it all has to be “accidental” or like a recession/depression for it to kick in …
theres soo many exceptions and such to those …i looked at one for an elderly relative and it wasnt worth the TP it was written on …
It sounds like you fully embrace the central dictum of post-rational capitalism: Exploit the ignorant, the easy victims! The less they end up with the more left over for me!
But whether your dictum is a good one or not, you missed OP’s point. Even when fraudsters are caught, often nobody goes to prison. Valuable executives still need their bonuses; stockholders need to be made whole. So the bill ends up paid by taxpayers, or by the many customers who did not fall for the scam.
No, the opposite. The OP is complaining that he is having to pay out for the people who, in his opinion, were defrauded due to their own ignorance or stupidity. And yet, he chose to do business with fraudsters himself, despite being supposedly better than those he’s criticising.
I have no problem paying out to anyone who was defrauded. That however is not 99% of the gravy train riding scumbags who chose to have PPI and then got their snout in the trough anyway.
Pretty much everyone who bougt PPI during that time was lied to, as the official policy of most banks was to lie to customers. But if, as you say, people should have seen through those lies, then you should also have done so, and not done businesss with banks that would have to pay those who lied to instead of you.
Yes, people chose to buy PPI - because they were outright lied to about what it was. Not mislead, not confused, directly and deliberately lied to. That’s why it is such a scandal, and why so much had to be repaid.
This. The second (much bigger) wave of PPI refund claims was sparked by a court ruling, Plevin vs Paragon Finance Ltd. In that case, the plaintiff paid almost £6,000 toward a PPI policy, but didn’t know until afterwards that only about £1,500 of that was going toward the policy protecting her. The remaining £4,500 was going to the broker who sold it to her in the form of commission.
If she’d been told upfront “Hey, only about 25% of your premium is going to go towards your PPI. The rest is going to go towards buying me a boat”, she might well have asked “Why am I being charged so much more than the policy - y’know, the thing I’m paying for - is actually worth?”
Banks deliberately didn’t require brokers to disclose the commission they were being paid on PPI policies. They didn’t require this because they knew that if they did, customers wouldn’t buy the PPI. Banks would then be forced to reduce the commission, which, in turn, would hurt their sales because their agents would have less incentive to sell it. Since the high commission guaranteed high PPI sales, they chose to keep customers in the dark instead, effectively lying to them about what they were really buying.
Anyone who bought PPI from an agent earning more than 50% commission on the sale, even if it was sold fairly, was being overcharged. It’s not their fault they were being overcharged because the level of commission wasn’t disclosed to them, and “How much commission are you earning on this sale?” isn’t a question which would naturally occur to most laypeople anyway. They were therefore 100% entitled to a refund.
The problem wasn’t the claimants. It was the lying, scheming banks. It’s always the lying, scheming banks.
When I took out my first mortgage, I spoke to a mortgage adviser at my Bank.
We discussed the merits of repayment v interest-only; what length of time to choose - based on my ability to repay (and my future earning prospects.)
At the end he strongly recommended PPI.
I took his advice.
Later I got all my PPI payments back (plus some interest), as my Bank admitted responsibility.
And 8% isn’t “some interest”, it’s an extraordinarily high rate of interest.
As for banks admitting responsibilty I see that more like when Gordon Brown called that horrible old woman a “bigot”. He knew he was right, but he apologised anyway because he knew that not apologising would make it worse for him, same with the banks: the writing was on the wall and fighting it wasn’t going to help.
It’s high, but it’s not punitive. Firstly, it’s simple interest, not compound. Secondly, it’s awarded to help put the consumer back in as close a position as possible to the position they would’ve been in had they not been mis-sold the PPI. Not only might they have invested that money, but the fact that they’d been without it might’ve meant they’d had to put other things on a credit card that they otherwise wouldn’t have. And interest on a credit card is way higher than 8%.
Thirdly, it wouldn’t be 8% on the whole amount. It’d be 8% on the first payment from the date it was made until the date the bank paid the compensation. Then 8% on the second payment from the date that was made until the bank paid the compensation, and so on. So if you made 60 PPI payments over 5 years, your compensation would include 60 lots of 8% interest (one for each payment you made), and each one would be smaller than the last. So it’s not as much as it sounds. Especially when you take into account the fact that, for most people, that 8% interest would be subject to income tax.
You’re right that the banks admitted responsibility because they didn’t have a choice, but they didn’t have a choice because they really were guilty of deception and malfeasance. The arguments in the Plevin case were very strong. It wasn’t a hard decision for the judge. Again, if the banks had only been honest with people from the outset none of this mess would’ve occurred.
Also, it’s worth pointing out that people who claimed PPI refunds on the grounds that they didn’t know how much of their payments were going towards commission, didn’t get back everything they paid. They only got back the difference between whatever 50% commission would be, and whatever the commission actually was.
For example, let’s say you spent £10,000 on PPI, and let’s assume the commission was 75%, which wasn’t unusual.
That would mean £2,500 was for the policy itself. You wouldn’t get any of that back.
The judge in the Plevin case effectively said that 50% commission was reasonable (a lot of people strongly disagreed, but that’s a whole other thing). 50% commission would be £5,000, so you wouldn’t get that back either.
The difference between what you would’ve paid if the seller had only taken 50% commission, and what you actually paid is £2,500. That’s what you’d get back, plus 8% simple interest paid in the manner I laid out in my last post.